The ASX is up 26 points in mid morning trade, with Consumer Staples getting a big boost from the WES demerger, adding 7.5 points to the market. Is this the top for supermarket retailing? MTS loses s/m boss to Coles. PMV another highlight, while FNP is in trading halt. Banks +ve but Resources better #ausbiz


  • Exdividend – FFI Holdings (FFI) 10.0c, Primary Health Care (PRY) 5.1c, Pacific Smiles Group (PSQ) 2.3c, QV Equities (QVE) 2.1c, Saunders International (SND) 1.0c, Reject Shop (TRS) 24.0c
  • Australian economic data – New Motor Vehicle Sales
  • RBA Bulletin
  • Japan – Capacity Utilisation, Industrial Production


  • European – Inflation, Labour Cost Index, Wage Growth
  • US economic data – Housing Starts, Building Permits, Industrial Production, Capacity Utilization, JOLTS – Job Openings


  • Bank Royal Commission continues today
  • Wesfarmers (WES) – Wesfarmers will demerge is Coles division. Will create a Top 30 company. Coles accounts for around 60% of the group’s capital and 34% of divisional earnings. “A demerger of Coles will facilitate greater focus by Wesfarmers on growth opportunities within its remaining businesses and the pursuit of value accretive transactions. The capacity to act opportunistically will be retained through a strong balance sheet and a cash generative portfolio. The Group expects to retain its current strong credit ratings and the dividend policy will remain unchanged.” The demerger will leave the group divisions of Bunnings, Kmart, Officeworks, and its Industrials portfolio. Wes will keep up to 20% of Coles after demerger to support the strategic alliance (including sharing data and digital etc) and retail substantial ownership in flybuys. The demerged Coles business will include a national network of 806 supermarkets as well as Coles Online; 8941 liquor stores nationally through Liquorland, Vintage Cellars and First Choice Liquor; Coles Express which operates 712 fuel and convenience store outlets under an exclusive alliance with Viva Energy; Coles Financial Services, which offers general insurance and credit cards; and Spirit Hotels, a chain of 88 hotels predominantly in Queensland. Further detail, including Coles’ proposed capital structure, dividend policy, separation, and governance arrangements will be announced later. The new Coles business will be led by Steven Cain (from Metcash), succeeding John Durkin who has had 10 years in leadership positions at Coles).
  • Premier Investments (PMV) – 1H NPAT up 9.4% to $78.6m. Total sales up 7.0% (lfl up 2.4% on a cc basis). Divisional performance: Smiggle sales +26.7%, (35 new stores), Peter Alexander sales +15.0% 912 new stores), Online sales up 71.2%. 2020 online sales target expected to be achieved 2 years ahead of target.
  • Metcash (MTS) – Scott Marshall has been appointed Chief Executive of the Supermarkets & Convenience pillar following the resignation of Steven Cain (the next Managing Director of Coles). Scott has been Chief Executive of Metcash’s Liquor business for the past four years, and has more than 25 years’ experience in wholesale and retail with Metcash, including in the Supermarkets business where he formerly led the Western Australia operations.
  • Mayne Pharma (MYX) – Has launched of doxycycline monohydrate immediate release (IR) capsules (50mg, 75mg and 100mg) in the US. Doxycycline IR capsules are a generic alternative to Monodox®, a tetracycline-class antibacterial indicated for the treatment of a number of infections, including adjunctive therapy in severe acne.
  • Freedom Foods (FNP) – Is in a trading halt pending a capital raising.
  • Orica (ORI) – Changes in segment reporting
  • Nufarm (FUM) – Completion of acquisition of European product portfolio from Adama


  • Newcrest Mining (NCM $19.87) – Citi has cut its target price to $24.00 from $27.10 but thins Cadia should resume its full operations in FY19 and the recent sell-off is a buying opportunity. Macquaire thinks the value ascribed to Caida will continue to be discounted until further clarity but has kept its $19 target and Underperform recommendation.




US EQUITIES – S&P500 -2 (-0.08%), Dow Jones +116 (+0.47%), Nasdaq -15 (-0.20%)

Main themes –

  • Trade war concerns continuing with the $30-60bn in tariffs on Chinese goods and services.
  • The New York Times reported that special counsel Robert Mueller had subpoenaed Trump’s businesses and the Trump Organization “in recent weeks”, some of which relate to Russia.
  • The US announced new sanctions against Russian individuals and groups, including its intelligence services and a Russian propaganda organisation.
  • Lary Kudlow made comments in support of a strong dollar.

EUROPEAN MARKETS – Mostly higher. STOXX +0.52%, UK FTSE +0.10%, German Dax +0.88%, French CAC -0.65%.


  • The US dollar was up 0.5% at 90.13.
  • The Aussie dollar is much weaker at US78.03c.

BONDS – Very little change. 2-yr: +3 bps to 2.28%, 5-yr: UNCH at 2.61%, 10-yr: UNCH at 2.82%, 30-yr: UNCH at 3.06%


  • WTI oil was up US23c at US$1.19. The IEA said global oil demand is expected to pick up this year but supply is growing at a faster pace, leading to a rise in inventories in the first quarter of 2018. OPEC also raised its forecast for non-member oil supply on Wednesday for this year to almost double the growth predicted four months ago.
  • Gold futures were down 0.69% at $1316.50.
  • Iron ore was up US50c at $71.00 a tonne.
  • LME metals were largely weaker – copper -0.98%, nickel -1.48%, aluminium -0.19%.


  • US economic data – February Export prices +0.2% (prior +0.8%). February Import prices +0.4% (prior +0.8%), Initial Claims 226,000 (consensus 226,000, prior 230,000), Continuing claims 1.879 mln (prior 1.875 mln), March Empire Manufacturing Survey 22.5 (consensus 15.0, prior 13.1), March Philadelphia Fed Index 22.3 (consensus 23.7, prior 25.8), March NAHB Housing Market Index 70 (consensus 72.0, prior 71)

NEXT WEEK – A big week with the Fed expected to raise interest rates at the FOMC meeting, as well as a Bank of England meeting and key domestic emplyment data

  • Domestically, the RBA meeting minutes are released on Tuesday along with housing prices, while the key focus will be employment data on Thursday.
  • Chinese house prices are out on Monday
  • Japanese trade data is on Monday, followed by the leading and coincident indices on Tuesday. Inflation is Friday, where a fall to 1.2% yoy is expected.
  • European data includes trade data on Monday, consumer confidence and economic sentiment on Tuesday and the Markit PMI numbers on Thursday.
  • The Bank of England meets on Thursday, and there is also some key UK data including inflation and retail trade, employment and wages data, and retail sales
  • The focus in the US will be the FOMC meeting on Tuesday and Wednesday, where there is a 90% chance of a rate hike prices into markets. Not much else on the data front – existing and new home sales and durable goods orders the main ones.


“What’s the use of happiness? It can’t buy you money.” – Henny Youngman, American comedian born this day in 1906. Died 24 February 1998.


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